Method and apparatus for validating an appraisal report and providing an appraisal score

ABSTRACT

A computer-based method for validating an appraisal report includes receiving appraisal data for a property, receiving property data for the property, verifying the appraisal data meets an appraisal guideline, providing a list of appraisal items that are present in the appraisal data, providing a medium discrepancy amount and a high discrepancy amount for the list of appraisal items, calculating a difference amount between the appraisal data and the property data for each appraisal item, and comparing the difference amount to the medium discrepancy amount and the high discrepancy amount.

CROSS REFERENCE TO RELATED APPLICATIONS

This application is a continuation of and is based upon and claims thebenefit of priority under 35 U.S.C. §120 for U.S. application Ser. No.11/771,114 filed Jun. 29, 2007 which claims priority to ProvisionalApplication No. 60/817,881 filed Jun. 30, 2006. The entire contents ofeach which are incorporated herein by reference.

BACKGROUND

1. Field

The invention relates to appraisal reports and scores. Moreparticularly, the invention relates to a method and apparatus forvalidating an appraisal report and providing an appraisal score.

2. Related Art

Generally, an appraiser attempts to judge the value of a given realestate property using a variety of objective and subjectivecharacteristics of the property. Some exemplary objectivecharacteristics may include without limitation the location of theproperty, the size of the property, and the square footage of anystructures on the property. A typical appraisal involves selectingrecently-sold properties having characteristics similar to those of thesubject property and using the recent sales prices of these “comparable”properties to set a value for the subject property.

The appraiser may write down the appraisal data for the objectivecharacteristics of the property on an appraisal form. The appraiser mayaccidentally or intentionally write down incorrect appraisal data on theappraisal form. For example, the appraiser may try to increase theappraised value of the subject property by writing down an additionalbathroom or bedroom or increasing the square footage. If a portion ofthe appraisal data is incorrect, the appraisal value of the subjectproperty and the selected comparable properties may be inaccurate orincorrect. Obtaining reliable appraisal data is important to valuing aproperty and determining comparable properties. In addition, theappraisal of a property can vary dramatically among different appraisersand even with the same appraiser on different days. Furthermore,existing approaches have been ineffective in automating the appraisalprocess so that clients can identify discrepancies in appraisal reportsand flag failed appraisal reports.

SUMMARY

A machine-readable medium for validating an appraisal report comprisinginstructions that upon execution cause a machine to receive appraisaldata for a property, receive property data for the property, verify theappraisal data meets an appraisal guideline, provide a list of appraisalitems that are present in the appraisal data, provide a mediumdiscrepancy amount and a high discrepancy amount for the list ofappraisal items, calculate a difference amount between the appraisaldata and the property data for each appraisal item, and compare thedifference amount to the medium discrepancy amount and the highdiscrepancy amount.

A computer-based method for validating an appraisal report comprisingreceiving appraisal data for a property, receiving property data for theproperty, verifying the appraisal data meets an appraisal guideline,providing a list of appraisal items that are present in the appraisaldata, providing a medium discrepancy amount and a high discrepancyamount for the list of appraisal items, calculating a difference amountbetween the appraisal data and the property data for each appraisalitem, and comparing the difference amount to the medium discrepancyamount and the high discrepancy amount.

BRIEF DESCRIPTION OF THE DRAWINGS

The features, objects, and advantages of the invention will become moreapparent from the detailed description set forth below when taken inconjunction with the drawings, wherein:

FIG. 1 is a block diagram of an appraisal validation system according toan embodiment of the invention.

FIG. 2 is a residential property appraisal form that is completed by anappraiser according to an embodiment of the invention.

FIG. 3 is a blank graphical user interface that shows the differentinput fields for the appraisal data that the appraiser fills in for thesubject property and comparable property 1 according to an embodiment ofthe invention.

FIG. 4 is a graphical user interface showing exemplary appraisal datafilled into the different input fields for the subject property andcomparable property 1 according to an embodiment of the invention.

FIG. 5 is a graphical user interface showing exemplary appraisal datafilled into the different input fields for the subject property,comparable property 1 and comparable property 2 according to anembodiment of the invention.

FIG. 6 is a graphical user interface showing exemplary appraisal datafilled into the different input fields for the subject property,comparable property 1, comparable property 2 and comparable property 3according to an embodiment of the invention.

FIG. 7 is a graphical user interface that allows a client to setdiscrepancy rules that define acceptable and unacceptable severitylevels based on any discrepancy between the supplied appraisal data fromthe appraiser and the property data from the public records databaseaccording to an embodiment of the invention.

FIGS. 8A and 8B are exemplary discrepancy reports using exemplaryappraisal data and exemplary property data according to an embodiment ofthe invention.

FIG. 9 is a map of the results identifying the subject property, thecomparables from the appraiser, and the comparables from the validationand scoring module according to an embodiment of the invention.

FIGS. 10A and 10B are graphical user interfaces used by a client toinput the appraisal data from the appraisal report and select thediscrepancy amounts for some of the items listed on the appraisal reportaccording to an embodiment of the invention.

FIGS. 11A and 11B are exemplary discrepancy reports using exemplaryappraisal data and exemplary property data according to an embodiment ofthe invention.

FIG. 12 is a map of the results identifying the subject property, thecomparables from the appraiser, and the comparables from the validationand scoring module according to an embodiment of the invention.

FIG. 13 is a flow chart of a method of validating an appraisal reportaccording to an embodiment of the invention.

DETAILED DESCRIPTION

Methods and systems that implement the embodiments of the variousfeatures of the invention will now be described with reference to thedrawings. The drawings and the associated descriptions are provided toillustrate embodiments of the invention and not to limit the scope ofthe invention. Reference in the specification to “one embodiment” or “anembodiment” is intended to indicate that a particular feature,structure, or characteristic described in connection with the embodimentis included in at least an embodiment of the invention. The appearancesof the phrase “in one embodiment” or “an embodiment” in various placesin the specification are not necessarily all referring to the sameembodiment. Throughout the drawings, reference numbers are re-used toindicate correspondence between referenced elements. In addition, thefirst digit of each reference number indicates the figure in which theelement first appears.

FIG. 1 is a block diagram of an appraisal validation system 100according to an embodiment of the invention. The appraisal validationsystem 100 may include one or more appraisal reports 105, an appraisalrecords database 110, a public records database 115, a distributedcomputer network 120, and a processing module 125.

The appraisal report 105 may be an appraisal form such as a UniformResidential Appraisal Report as shown in FIG. 2. The appraisal report105 may be manually completed by an appraiser using the appraisal formshown in FIG. 2 or electronically completed by an appraiser using thegraphical user interfaces shown in FIGS. 3-6. Referring to FIG. 2, theappraiser may write the appraisal data 111 on the appraisal form. Theappraisal form may be scanned in as a TIFF, JPEG, BMP, XML, PDF or 1004structured file format and may be sent to the appraisal records database110 via email, html upload, ftp and/or xml. The appraisal recordsdatabase 110 may use OCR and/or ICR to extract the appraisal data 111from the appraisal form and/or may convert the appraisal data 111 into aconsistent, structured file format. A user may also manually input theappraisal data 111 into the graphical user interfaces and then theappraisal data 111 is received by the appraisal records database 110.

FIG. 3 is a blank graphical user interface that shows the differentinput fields for the appraisal data 111 that the appraiser fills in forthe subject property according to an embodiment of the invention. FIG. 4is a graphical user interface showing exemplary appraisal data 111filled into the different input fields for the subject propertyaccording to an embodiment of the invention. The appraiser may use ahand-held device (e.g., iPhone, BlackBerry, etc.) or other processingdevice to access a graphical user interface to input the appraisal data111 (1305). The appraisal data 111 may include an appraiser's name,license number and state of the license. The appraisal data 111 may alsoinclude an address, a sale price, a sale date, a location, a type ofleasehold, a lot size, a home size (i.e., gross living area), a view, adesign and appeal, a quality of construction, an age or year built, acondition, a bedroom count, a bathroom count, a roof type, a functionalutility, a heating/cooling type, energy efficient items, a number ofgarages, and an amenities list of the property.

The appraiser may provide the appraisal data 111 for one or morecomparable properties (e.g., Comparable No. 1, Comparable No. 2 andComparable No. 3) as shown in FIG. 2. The appraiser may select AddAnother Comparable (FIG. 3), which causes FIG. 4 to be displayed andallows the appraiser to input appraisal data 111 for comparable property1. The appraiser may select Add Another Comparable (FIG. 4), whichcauses FIG. 5 to be displayed and allows the appraiser to inputappraisal data 111 for comparable property 2. The appraiser may selectAdd Another Comparable (FIG. 5), which causes FIG. 6 to be displayed andallows the appraiser to input appraisal data 111 for comparable property3. More than 3 comparable properties can be added using similargraphical user interfaces.

Referring to FIG. 1, the appraisal records database 110 stores theappraisal data 111 received from the appraisal report 105 or theappraiser. The appraisal records database 110 stores the appraisal data111 for each property as a separate record. The appraiser may determineor input the appraisal data 111 for a number of properties that areconsidered comparable to the subject property and may transmit theappraisal data 111 to the appraisal records database 110. The appraisalrecords database 110 can be any type of storage device.

The public records database 115 stores property data 116 received from athird party provider such as First American Corporation or a county orcity office (1310). The public records database 115 stores the propertydata 116 for each property as a separate record. The property data 116may include details about the subject property and the comparableproperties. The property data 116 for each property may include anaddress, a sale price, a sale date, a location, a type of leasehold, alot size, a home size (i.e., gross living area), a view, a design andappeal, a quality of construction, an age or year built, a condition, abedroom count, a bathroom count, a roof type, a functional utility, aheating/cooling type, energy efficient items, a number of garages, andan amenities list of the property. The public records database 115 canbe any type of storage device.

The appraisal records database 110 and the public records database 115may be coupled via a wireless or wired link to a distributed computernetwork 120. The distributed computer network 120 can be the Internet orother network capable of receiving and transmitting data. Thedistributed computer network 120 can be a private or a public network.The distributed computer network 120 may be coupled via a wireless orwired link to a processing module 125. In one embodiment, the appraisalrecords database 110 and the public records database 115 are coupledbetween the distributed computer network 120 and the processing module125.

The processing module 125 may be a processor, a controller or otherdevice capable of comparing, extracting, processing, retrieving,transmitting, and validating data. The processing module 125 may includean appraisal guidelines module 130, an appraisal data module 135, aproperty data module 140, a discrepancy rules module 145, a validationand scoring module 150, a validation rules module 155, an appraisalreport module 160, a discrepancy report module 165, and an appraiserreport module 170. All the modules may be implemented using software,hardware, and combinations thereof.

The appraisal guidelines module 130 includes appraisal guidelines suchas the Uniform Standards of Professional Appraisal Practice (USPAP)appraisal guidelines. The USPAP are the established requirements forprofessional appraisal practice, which may include the minimumfoundation for the development of an appraisal and the reporting of theresults. In addition, statistical perspectives are important to theaccurate interpretation of data and the development of assumptions madeto reach a value conclusion. The appraisal guidelines may include a listof guidelines that should be met for the appraisal report 105. Theappraisal guidelines module 130 may verify that the appraisal data 111meets appraisal guidelines (1315).

The appraisal data module 135 includes the appraisal data 111 for thesubject property and all comparable properties.

The public records data module 140 includes the property data 116 forthe subject property and all comparable properties.

The discrepancy rules module 145 allows clients to establishclient-by-client discrepancy rules (exemplary discrepancy rules shown inFIG. 7) that define acceptable and unacceptable severity levels based onany discrepancies between the supplied appraisal data 111 from theappraiser and the property data 116 from the public records database115. Hence, the discrepancy rules module 145 can detect appraisal fraudif the number of medium and/or high severities is greater than aspecified amount. The discrepancy rules module 145 may display agraphical user interface as shown in FIG. 7 to allow clients to settheir risk management and discrepancy rules that fit well with theiroverall risk tolerance and operational guidelines. Using the discrepancyrules module 145, the client may provide a list of appraisal items andone or more discrepancy amounts or rules for each appraisal item in thelist (1320, 1325). For example, the client may provide a mediumdiscrepancy amount (1) and a high discrepancy amount (3) for the grossliving area (see FIG. 7). The appraisal items may include a sale price,a sale date, a gross living area, a lot size, a number of bedrooms, anumber of bathrooms, a year built, and a distance from the subjectproperty. A discrepancy rule can be set for each appraisal item listedon the appraisal report 105. For example, the client may set discrepancyrules for the sale price at 1% greater than public records for mediumseverity and at 3% greater than public records for high severity. Theclient may input a medium severity discrepancy amount and a highseverity discrepancy amount for each appraisal item listed on theappraisal report 105.

In addition, the client may receive one or more validation rules. Thevalidation rules may include (1) there is an undisclosed sale on thesubject or a comparable, (2) there are 1 or more high severitydifferences between user-provided data and the public records data, (3)there are 2 or more medium severity differences between user-provideddata and the public record data, (4) the appraiser's license is notcurrent or broker's license associated with the appraiser is notcurrent, and (5) the appraiser has not signed the appraisal form(validation of signature or presence of signature) (1330). The clientmay set a fail flag for one or more validation rules (1335). A set failflag indicates that if the condition is met, the client will receive afail notice indicating that the appraisal data 111 meets the conditionset by the validation rule (1370, 1375). If a fail flag is set for avalidation rule and the validation rule is met, the validation rulesmodule 155 transmits a failed condition to the validation and scoringmodule 150. The client may create the validation rules based on theclient's needs.

The validation and scoring module 150 may receive the appraisalguidelines to ensure that the appraisal data 111 meets or exceeds theappraisal guidelines. For example, the validation and scoring module 150may ensure that the appraisal report 105 includes all the requiredinformation in the correct format and no necessary fields have been leftblank. The validation and scoring module 150 may extract the appraisaldata 111 from the appraisal report 105 or receive the appraisal data 111from the appraisal records database 110, receive the property data 116from the property records database 115 or the property data module 140and compare the appraisal data 111 to the property data 116 to determinewhether the appraisal data 111 is within a discrepancy amount of theproperty data 116 (1340). The validation and scoring module 150 maydetermine whether each item of the appraisal data 111 is within adiscrepancy amount of each corresponding item of the property data 116and if so, validates each item of the appraisal data 111, and if not,determine the severity level using the set discrepancy amounts or rules(1345, 1350, 1355, 1360, 1365). The validation and scoring module 150may use the appraisal guidelines, the discrepancy rules and/or thevalidation rules to validate the veracity of the appraisal data 111(i.e., the content in the appraisal form including the subject propertyand the comparables).

The validation and scoring module 150 may also determine the accuracy ofthe data provided by the appraiser for the comparable properties. Forexample, the validation and scoring module 150 may determine thedistance from each comparable to the subject property, whether thedistance falls within a proper guideline to be considered a comparableproperty, whether any obstacles or blights such as railroad tracks orfreeways exist near or between the subject property and any of thecomparable properties, whether the comparable is within the samesubdivision or within the same census tract as the subject property,whether the comparable property is an accurate comparable to the subjectproperty, whether the property data includes other comparable propertiesthat are more comparable (i.e., a property that would adversely affectthe valuation) than the comparable properties identified by theappraiser, and compare the sale prices of the comparable properties tothe sale price of the subject property and validate that the sale pricesof the comparable properties are within a certain percentage (e.g., 10%)of the sale price of the subject property. Using the property data 116for the subject property, the validation and scoring module 150retrieves other comparable properties from the public records database115. The other comparable properties may be selected based on one ormore of the following: a sale price, a sale date, a gross living area, alot size, a number of bedrooms, a number of bathrooms, a year built, adistance from the subject property, obstacles or blights such asrailroad tracks or freeways near the subject property and/or thecomparable property, and the comparable property is within the samesubdivision or within the same census tract as the subject property.

The validation and scoring module 150 may also track usage and audittrails for compliance, apply USPAP and Federal National MortgageAssociation (FNMA) appraisal validation rules to the appraisal data 111and to check the range of values in the neighborhood in the past 12months, for example, and what is the variance outside the range.

The appraisal report module 160 provides detailed information about thesubject property and any comparable properties as provided by theappraiser. The discrepancy report module 165 generates and provides thediscrepancy report to the client.

The appraiser report module 170 generates and provides a list ofappraisers and lists the number of medium severity, high severity andfailed appraisal reports associated with each particular appraiser. Themedium severity may be weighted less than the high severity. The highseverity may be weighted less than the failed appraisal reports. Eachappraiser may be assigned an appraisal score from for example 1 to 1000based on the number of medium severity, high severity and failedappraisal reports. The higher score may indicate a better appraisalhaving a lower number of medium severity, high severity and failedappraisal reports.

The appraiser reports may be organized in a number of ways. For example,each appraiser report may list the appraiser's name and license number,an appraisal score and a turn time (i.e., the number of days it takesthe appraiser to complete the appraisal) for each appraisal performed bythe particular appraiser, an aggregate appraisal score and an averageappraisal score based on their entire portfolio of appraisal scores. Inaddition, the list may include an indicator (e.g., default, repurchase,etc.) and a number of the appraiser's properties that have moved into adefault or repurchase state. The appraisal report can sort theappraisers based on one or more of the following: aggregate appraisalscore, average appraisal score, default number or rate, repurchasenumber or rate, and average turn time. The appraisal records database110 can store the appraiser reports information.

FIGS. 8A and 8B are exemplary discrepancy reports using exemplaryappraisal data 111 and exemplary property data 116 according to anembodiment of the invention. The discrepancy report module 165 outputs adiscrepancy report, which lists the appraisal items, the number ofmedium severity discrepancies and the number of high severitydiscrepancies (1380). The discrepancy report shows a discrepancy amount,a discrepancy percentage, and a severity level between the appraisaldata 111 and the property data 116 for each discrepancy rule and/or foreach validation rule. The discrepancy report is provided for the subjectproperty and any comparable properties identified by the appraiser. Inaddition, the discrepancy report provides other comparable propertiesidentified by the validation and scoring module 150 (shown in FIG. 8 bas Analyzer's Top Comparables). The discrepancy report can be providedin Word, HTML or batch file format. The discrepancy may color-code allthe discrepancies based on severity.

FIG. 9 is a map of the results identifying the subject property, thecomparables from the appraiser, and the comparables from the validationand scoring module 150 according to an embodiment of the invention(1380). For example, the subject property is shown using a star, thecomparables from the appraiser is shown using circles, and thecomparables from the validation and scoring module 150 is shown usingflags. The map feature allows an appraisal reviewer to determinesubjectively if the comparables provided by the appraiser appear to bethe best comparables for the subject property.

FIGS. 10A and 10B are graphical user interfaces used by a client toinput the appraisal data 111 from the appraisal report 105 and selectthe discrepancy amounts for some of the appraisal items listed on theappraisal report 105 according to an embodiment of the invention. Thegraphical user interfaces may be automatically filled in by theprocessing module 125.

FIGS. 11A and 11B are exemplary discrepancy reports using exemplaryappraisal data and exemplary property data according to an embodiment ofthe invention.

FIG. 12 is a map of the results identifying the subject property, thecomparables from the appraiser, and the comparables from the validationand scoring module according to an embodiment of the invention.

1. A machine-readable medium for validating an appraisal reportcomprising instructions that upon execution cause a machine to: receiveappraisal data for a property; receive property data for the property;verify the appraisal data meets an appraisal guideline; provide a listof appraisal items that are present in the appraisal data; provide amedium discrepancy amount and a high discrepancy amount for the list ofappraisal items; calculate a difference amount between the appraisaldata and the property data for each appraisal item; and compare thedifference amount to the medium discrepancy amount and the highdiscrepancy amount.